Obstacles to Growth of SMEs

Voordeckers and Steijvers (2006) investigated the banking industry in Belgium and revealed that availability of collateral is one of the main problems due to lack of access to credit. For decades, the determinants of collateral have attracted the interest of scholars. In practice many small and medium enterprises must promise personal collateral and commitment. There is little empirical evidence of determinants of these personal collateral and promises. They were the first people to empirically investigate the determinants of individual collateral and commitment in bank-oriented economies as well as the determinants of commercial collateral for small and medium enterprises.

It is considered to be one of the biggest obstacles to the growth of small and medium enterprises and the lack of information on the credibility of small business has made it difficult for SMEs to borrow money under difficult financial conditions. With these changes, all designated banks and credit institutions are required to provide credit information they hold for business, subject to the license of small business. In order to bring greater competition to the financial markets, this information is equally shared without affecting all financial service providers.

Finance alone is not sufficient for the development of small and medium enterprises; many non-fiscal matters are also important for the development of small and medium enterprises. Care centers and counseling centers throughout the country are needed to provide small and medium enterprises with government advice on planning, product market availability, and basic needs of paper procedures.

The proposed research aims to prepare a main report on the financing of small and medium enterprises and SMEs. The report emphasizes obstacles facing SME financing and provides new insights to overcome these constraints in SME development. The report will review these issues and provide policy advice in selected member countries. The target audience of this report is Islamic financial institutions, traditional financial institutions of the World Bank and the Islamic Development Bank, regulators, policy makers, small business associations, multilateral agencies, academic circles, standard setters reports, We will contribute to policy debate by discussing the set of strategic recommendations presented in the report.